Reform effort has docs worrying, employers waiting

For many employers, what’s in or out of the congressional health reform bill is something they can put off thinking about until 2013, when most of the provisions would take effect.

But for doctors, hospitals and others in the medical industry, the uncertainty is affecting business planning today.

Riverside Radiology and Interventional Associates Inc. in Columbus, a 70-physician independent practice for specialists in medical imaging, has delayed hiring, expansion and planning for partnerships that would be months in the making because it’s unsure how insurance reimbursement will change for MRIs, CT scans and treatments it provides, said President Dr. Mark Alfonso.

“It’s difficult to plan ahead when you don’t know what the plan is going to entail,” he said.

The bill headed to a congressional conference committee aims to extend coverage to more uninsured Americans, end pre-existing condition limits by insurers, start various test projects to control medical costs, trim Medicare spending, and use a mix of taxes and credits to encourage employers to offer insurance coverage – but not so-called “Cadillac” plans.

But when it comes to trimming spending, the government’s “waste” is some business’ revenue.

“Many people will have, theoretically, more health insurance, but what will insurance be?” Alfonso said. “I don’t know if there’s going to be a net gain.”

Getting anxious

A defense bill included the latest annual stopgap delay of a 21.5 percent cut in Medicare payments to doctors that would have taken effect in January under the existing formula, but delayed it only until March. The reform bill still contains no permanent solution, said Mark Jarvis, director of practice economics for the Ohio State Medical Association.

“You’re starting to see practices anxious over the bill,” he said.

The projected rate cut under the formula grows every year, he said, and physicians worry almost every December if they’ll have to drop out of Medicare. In addition, some estimates project 1 million more Ohioans becoming eligible for the state-federal Medicaid insurance program for the poor and disabled under the bill. Physicians say they lose money on every Medicaid patient, although Jarvis acknowledged that outright unpaid bills should go down if more patients are insured.

The uncertainty doesn’t jibe with the federal expectation of investment in technology for electronic medical records, Jarvis said.

“By not being able to predict your revenue for the future,” he said, “it makes it almost impossible to plan any kind of capital improvement.”

Riverside Radiology has gone electronic, partly to buffer against revenue drops because it’s a more cost-effective system, but mostly because it improves diagnoses and avoids repetition, Alfonso said. The practice has a common computerized system to view images taken at 17 hospitals and 35 outpatient and office sites, and adopted an automated billing process that reduces errors and makes bills easier for patients to understand.

Federal reform and efforts by insurers and practices to explain prices and billing will help make patients more aware of the true costs of medicine, beyond the co-payment, Alfonso said.

“They’re probably going to be price shopping more than they were in the past,” he said.

The state medical association, which represents doctors in many specialties, has denounced the federal bill – in a break from the support-with-caveats stance of the national American Medical Association and the primary care-focused Ohio Academy of Family Physicians. Hospitals also are worried about proposed payment cuts, although the American Hospital Association supports the overall package.

Pediatric hospitals in particular could lose out because the bill eliminates subsidies for care for the uninsured and Medicaid patients, said Nick Lashutka, president of the Ohio Children’s Hospital Association. Lawmakers argue the subsidies aren’t needed if there are fewer uninsured, but pediatric hospitals depend on Medicaid for half their volume, compared with 12 percent for adult acute-care hospitals. For his group’s six members, Lashutka said that would be a $40 million cut.

Idling the Cadillac

Outside the health-care industry, the unfinished bill meets a hodgepodge of business opinion. The National Federation of Independent Business opposes it as not adequately lowering insurance costs while the Small Business Majority lauds it for its strong expense controls.

Businesses likely need to brace for three more years of 7 percent to 10 percent premium hikes before any substantive changes take effect, said Chris Goldsmith, Cleveland-based vice president with the Sibson Consulting division of human resources expert Segal Co.

Employers aren’t yet changing benefits to anticipate proposed taxes on high-cost insurance – the so-called Cadillac plans, said Mike Stull, a regional vice president in Dublin for Employers Health Coalition of Ohio Inc., a Cleveland-based group of mostly self-insured large companies that works to contain health-care costs.

“On the whole, the economic recession has played a much larger role in employers’ health benefits strategies than this reform legislation,” he said in an e-mail to Columbus Business First.